Wix cut 1,000 jobs last month: 20% of its entire workforce, the largest layoff in the company's history. The CEO's explanation pointed squarely at AI. The company needed to become "faster, leaner, and flatter" to adapt to what he called "the most significant shift in how companies are built since the invention of modern programming languages in the 1970s."
Sound familiar? It should. Block said nearly the same thing when Jack Dorsey announced 4,000 cuts. Snap said it. Atlassian said it. The phrasing shifts slightly from company to company, but the structure is identical: AI is changing everything, we need smaller and flatter teams, here are the severance packages.
There's a name for this now. Commentators, Fortune among them, call it "AI washing," using artificial intelligence as narrative cover for workforce reductions that are driven by other forces.
Paul Osterman, professor emeritus at MIT Sloan, wrote the book on disposable workers — literally. His forthcoming book, due this August, is titled Disposable Workers. He put it bluntly: "AI is a perfect excuse to justify big layoffs. It makes it seem as if it's not our decision, our fault — it's the technology." Then he added the line that should give every CTO pause: "They've been saying that for 20 years."
Two things are both true at once.
Here's where I'll push back on the AI-washing framing, not to defend the CEOs, but because the nuance matters if you're hiring right now.
Osterman is right that AI is being used as cover. When Wix's CEO also points to the Israeli shekel strengthening against the dollar — a meaningful share of the company's costs are shekel-denominated while its revenue is largely in dollars — you can see this is a cost structure problem as much as an automation problem. Pandemic-era overhiring finally catching up. Currency exposure. A product business that needs to reset its labor cost base.
But the AI-washing critics are wrong if they think AI has nothing to do with it. The tech sector has cut more than 150,000 jobs in 2026 so far, by Layoffs.fyi's running count. Not all of those are "AI washing." Some of them are real. Some of those roles — content moderation queues managed by humans, support tier-1 scripts, certain categories of web development, QA testing of straightforward UI paths — are genuinely smaller jobs now than they were three years ago because AI-assisted tooling has compressed them.
The question worth asking is not "is AI causing these layoffs?" It is: which specific roles are smaller, and which roles are larger?
The layoff cohort is being misread.
If you are in the market for engineering talent right now — and most of the CTOs I talk to are — the AI-washing layoff wave is sending you a clear signal.
The engineers being let go are not uniformly bad. Many of them are genuinely skilled people who were hired into roles that made sense in 2022 and make less sense in 2026. They are not AI casualties in the sci-fi sense — they weren't replaced by a robot. They are people whose specific function got compressed by tooling, and whose company was also over-hired and currency-squeezed and looking for a clean story to tell the board.
That means the talent pool right now contains a real mix. Some of the people available have the wrong skills for the moment. But some of them have exactly the skills you need, they are freshly motivated, and they are being evaluated by hiring managers who are reading the "AI layoff" headlines and assuming everyone in this cohort is somehow a casualty of automation when what actually happened was more complicated.
That asymmetry is an opportunity.
What to actually ask.
When you are interviewing someone who was laid off from a Wix or a Block or a Snap in the last six months, the question is not "were you displaced by AI?" That question assumes the headline is the story.
The better questions are:
- What specific work were you doing, and has that category gotten smaller or larger in the last 18 months?
- How has the way you work changed in two years? What's in your workflow now that wasn't before?
- What's your ratio of code written from scratch to code you generate and validate?
- Where does AI break for you, and how do you catch it?
Those questions are trying to find out the same thing: does this person understand the actual shape of the current moment, and have they adapted their practice to it? Someone who was laid off from a company that over-hired in 2022 and who has spent the last 18 months figuring out how to ship significantly more with AI assistance is not a cautionary tale. They are, in many cases, exactly who you should be trying to hire before someone else gets there first.
The floor has dropped on the wrong roles. The ceiling has risen on the right ones.
AI didn't cause the 2026 layoff wave. But AI is reshaping which roles are scarce and which roles are surplus, and that reshaping is real even when the layoff announcement is half spin.
The engineers who know how to work with AI tools at a high level — who treat model output as a first draft that needs engineering judgment, not a final answer that needs copy-pasting — are not part of the surplus. They are increasingly scarce, and they don't stay available long.
The engineers who were doing rote work that AI now handles, who haven't updated their practice to work at the level above that rote work — some of those people are in the layoff pool. Not because a CEO wanted a clean story for the press release. Because the work has changed.
Know the difference. The difference is the whole game.
VC5 Consulting helps technology companies build and scale engineering teams. We work with CTOs and technical founders on staffing strategy, compensation benchmarking, and talent pipeline development. If you're sorting signal from noise in the current talent market, let's talk.